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Dollar rises as inflation remains subdued
Mon, Mar 1 2010, 18:43 GMT
The world’s leading currency managed to gain ground against its major counterparts as data reported from the U.S economy showed that inflation remains subdued and below the Fed target rate of 2.0%, moreover the U.S economy showed that consumer spending managed to rise above expectations in the month of February despite the slight rise in income over the same period.
Therefore and due to these news, investors turned away from commodities especially Gold as it’s seen as the best investment to hedge against inflation, but with no inflationary threats rising at this moment ahead of the recovery process in the United States, investors dumped Commodities along with high yielding assets and focused on low yielding assets such as the Dollar and the Yen along with Stocks that rose in today’s trading session.
In addition, another push by the manufacturing and construction sectors in the U.S helped equity indices to gain as the ISM Manufacturing index managed to expand for a seventh consecutive month, signaling that the sector will continue to support the ongoing economic recovery over the upcoming period as the improvement in economic conditions prevails around the globe.
Meanwhile, Greece’s debt problems continue to affect the 16-nation currency, where recent news showed that European leaders are willing to provide Greece with a bailout plan if the country restructure its debt obligations and its budget status in the upcoming months.
As for the Dollar Index, it managed to rise in today’s trading session as the Dollar continues to advance against majors, whereas the index opened today’s trading session at 80.511 where it managed to reach the highest point at 81.256 and the lowest at 80.327 meanwhile it’s currently trading at 80.902. Gold declined to $1116.92 an ounce from the opening levels of $1119.15 an ounce while Oil dropped to $78.42 a barrel compared with the opening levels of $79.78 a barrel.
The euro-dollar pair slashed the three day advance that took place last week as it’s currently trading at $1.3541 where it breached the support levels at $1.3606 as it’s currently targeting the support levels that are set at $1.3419. the pair is rising on the four hour scale where it’s projected to continue to rise slightly in a correctional move towards the resistance levels that lay ahead in its way at $1.3556 before it continues to drop during this week’s trading, since projections show that the pair might trade below the 1.3500 levels, where the Dollar will continue to gain. The pair managed to reach the highest point at $1.3653 and the lowest at $1.3458 while the upcoming support and resistance levels can be witnessed at $1.3485 and $1.3655 respectively.
Moving to the Sterling, the GBP/USD pair dropped severely in today’s trading session where the pair’s opening levels was set at $1.5155 while currently trading at $1.4983 along with reaching the lowest levels for today at $1.4780. The pair’s severe decline came due to the breach of the 61.8% Fibonacci correctional level at $1.4945, however the pair managed to rise again to retest the levels at $1.4945 before settling above this level, though we should note that trading belwo the 1.4945 will lead the pair to target the $1.4785 levels again. As for the upcoming support and resistance levels they can be witnessed at $1.4945 and $1.5060 respectively.
Finally talking about the USDJPY pair, the pair managed to advance in trading and test the resistance levels at $89.28 as it reached the highest in today’s trading session at $89.56 while the lowest at $88.79, the pair is currently trading close to those resistance levels at $89.15 where projections state that the pair will continue to rise on the daily scale as it’s trading in an oversold area where a closing above the previously mentioned resistance levels on the daily scale might help the pair to continue its ascending trend to reach its targets at $89.92. the pair is declining on the four hour scale where it’s currently in attempt to breach the support levels at $89.10 where expectations show that the pair could breach those levels and decline slightly in a correctional move but the key support and resistance levels are set at $89.00 and 89.70 respectively.